Gallaher accepts Japanese bid

Gallaher makes Benson & Hedges

By Harry Wallop

8:00AM GMT 15 Dec 2006

Japan Tobacco, the maker of Camel cigarettes, has won the approval of the board of Gallaher for a £7.5bn takeover of the UK manufacturer of Benson & Hedges, just a week after the possible tie-up was first revealed.

Gallaher has recommended an offer of £11.40 a share in cash from Japan Tobacco, the Japanese company said today.

This will be the largest-ever corporate purchase by a Japanese firm outside its domestic market, topping Softbank Corp's acquisition of the local operations of British mobile telephone operator Vodafone for about $15.3bn earlier this year.

It will also transform Japan Tobacco into one of the world's largest cigarette companies, giving it strong positions in fast-growing markets in Russia and the Ukraine.

Analysts believe Japan Tobacco's offer could trigger consolidation in the industry, and that rival offers for Gallaher from Altria, the world's largest cigarette maker, or private equity investors are likely to follow.